Segmentation, Targeting and
Positioning
Nivea
 Avon



General Mills
Home Depot
Discussion Question
What are some
commonly used
demographic,
geographic and
behavioral
descriptors?

SAGA segmentation of UK grandparents,
where a complete description of each
category can be found in this
Pharmaceutical industry
segmentation
Inline skating segmentation
How should we Decide Which Segments to
Target? - Steps in Constructing a MarketAttractiveness/Competitive-Position Matrix
1. Choose criteria to measure market
attractiveness and competitive position.
2. Weigh market attractiveness and competitive position
factors to reflect their relative importance.
3. Assess the current position of each potential target
market on each factor.
4. Project the future position of each market based on expected
environmental, customer, and competitive trends
5. Evaluate implications of possible future changes for business
strategies and resources requirements.
A Useful Tool for Assessing Market
Segments: Segment Rating Chart
WEIGHT
RATING (0-10)
TOTAL
Customer needs and behavior
.5
10
5.0
Segment size and growth rate
.3
7
2.1
Macro trends
.2
8
1.6
Total: Market attractiveness
1.0
Market attractiveness factors
8.7
Competitive position factors
Opportunity for competitive advantage
.6
7
4.2
Capabilities and resources
.2
5
1.0
Industry attractiveness
.2
7
1.4
Total: Competitive position
1.0
6.6
The Market Attractiveness/
Competitive Position Matrix
Market
Attractiveness
High
(8-10)

Moderate
(4-7)
Low
(0-3)
Low
Moderate
High
(0-3)
(4-7)
(8-10)
Company’s Competitive Position
 = Market attractiveness and competitive position of distance runners segment
Implications of Alternative Positions
Within the Market-Attractiveness/
Competitive-Position Matrix
Market Attractiveness
Weak
High
Med.
Low
Build selectively:
• Spec. in limited strengths
• Seek to overcome weak.
• Withdraw if indications of
sustainable growth are
lacking
Limited expansion or
harvest:
• Look for ways to expand
w/out high risk; otherwise
min. invest. and focus
operations
Competitive Position
Medium
Strong
Desirable Potential Target
Protect position:
• Invest to grow at max.
digestible rate
• Concentrate on maintaining
strength
Desirable Potential Target
Manage for earnings:
Build selectively:
• Protect existing strengths
• Invest to improve position only • Emphasize profitability by
increasing productivity
in areas where risk is low
• Build up ability to counter
competition
Desirable Potential Target
Invest to build:
• Challenge for leadership
• Build selectively on strengths
• Reinforce vulnerable areas
Divest:
Manage for earnings:
• Sell when possible to maximize • Protect position
cash value
• Minimize investment
• Meantime, cut fixed costs &
avoid further investment
Protect and refocus:
• Defend strengths
• Seek ways to increase
current earnings without
speeding market’s decline
Sources: Adapted from George S. Day, Analysis for Strategic Market Decisions (St. Paul: West, 1986), p. 204; D. F. Abell and J. S. Hammond, Strategic Market Planning Problems
and Analytical Approaches (Englewood Cliffs, NJ: Prentice Hall, 1979); and S. J. Robinson, R. E. Hitchens, and D. P. Wade, “The Directional Policy Matrix: Tool for Strategic
Planning,” Long Range Planning 11 (1978), pp. 8-15.

Concentrated Marketing


Undifferentiated Marketing


Concentrate on the most attractive
segment
One marketing mix for all
Differentiated Marketing

Modify marketing mix for different
segments
Subway
What is Positioning?
A couple of definitions
Creating distinct and valued physical and
perceptual differences between one’s
product and its competitors, as perceived
by the target customer.
 The act of designing the firm’s market
offering so that it occupies a distinct and
valued place in the minds of its target
customers.

Discussion Question
1. Which words are critical in these definitions? Why?
Creating distinct and valued physical and
perceptual differences between one’s
product and its competitors, as perceived
by the target customer.
 The act of designing the firm’s market
offering so that it occupies a distinct and
valued place in the minds of its target
customers.

Generic Competitive Strategies
Exhibit 7.1
Competitive Advantage
Broad Target
Competitive
Scope
Narrow Target
Lower Cost
Differentiation
Cost
Leadership
Strategy
Differentiation
Strategy
Focus Strategy
Focus Strategy (Differentiation
Based)
Source: Adapted from Michael Porter, Competitive Advantage,New York: The Free Press, 1985, p. 12.
Comparison of Physical and
Perceptual Positioning Analysis
Exhibit 7.3
Physical positioning
• Technical orientation
• Physical characteristics
• Objective measures
• Data readily available
• Physical brand properties
• Large number of
dimensions
• Represents impact of
product specs and price
• Direct R&D implications
Perceptual positioning
• Consumer orientation
• Perceptual attributes
• Perceptual measures
• Need for marketing research
• Perceptual brand positions
and positioning intensities
• Limited number of dimensions
• Represents impact of product
specs and communication
• R&D implications need to be
interpreted
Levers to establish positioning
Simple physically based attributes
Single physical dimension such as quality,
power or size
Complex Physically based attributes
Concepts like “roominess” and “User friendly”
Essentially abstract attributes
Not directly related to the physical attributes,
sexiness of perfume, prestige
Price
Steps in the Positioning Process
Exhibit 7.4 (1 of 2)
1. Identify relevant set of competitive products serving a target
market.
2. Identify the set of determinant attributes that define the “product
space” in which positions of current offerings are located.
3. Collect information from a sample of customers and potential
customers about perceptions of each product on the
determinant attributes.
Features
 Benefits
 Parentage
 Manufacturing Processes
 Ingredients
 Endorsements
 Comparison
 Pro Environment
 Price/Quality

Steps in the Positioning Process
Exhibit 7.4 (2 of 2)
4. Determine product’s current location (positioning) in the product
space and intensity thereof.
5. Determine customers’ most preferred combination of determinant
attributes.
6. Examine the fit between preferences of market segments and
current position of product (market positioning).
7. Write positioning statement or value proposition to guide
development and implementation of marketing strategy.
Look for opportunities
 Repositioning hard to do
 Don’t be too confusing (Holiday Inn)

Discussion Question
3. What’s the tangible output of the
positioning process?
Positioning Statement for Volvo
in North America
For upscale American families,
Volvo is the family automobile that
offers maximum safety
 Generic format for positioning
statements: For (target market),
(brand) is the (product category)
that (benefit offered).

Value Proposition for Volvo
in North America




Target market: Upscale American
families
Benefits offered: Safety
Relative price: 20% premium to domestic
family cars
Generic format for value propositions:
Target market
 Benefits offered (and sometimes
not offered)
 Relative price

Some Key Questions
Concerning Positioning Decisions
 For
whom are they written?
 In what sort of language?
 Should they focus on features or
benefits?
 How many differentiating
attributes should anchor them?
A Useful Tool for Positioning Decision
Making: Perceptual
Maps
Not Sweet
Sweet
Nutritious
Not Nutritious
Where would you plot your favorite
cereals? Your kids’ favorites? Your
grandma’s?
FedEX
 Fast, reliable on-time delivery
 Southwest Airlines
 Affordable, no-frills air travel
 Rolex
 Status-symbol fashion accessory
 Ebay
 The virtual marketplace to buy or sell anything
